Your deductible is one of the most important choices you make when buying insurance. It directly affects how much you pay in premiums and how much you pay out of pocket when you make a claim. This guide explains how deductibles work, how they differ across car, home, condo and other policies, how to weigh a higher deductible against the premium saving, and how to pick one. It is one of the cross-cutting guides in the travel, pet and other insurance hub.
How deductibles work
When you file an insurance claim, you pay the deductible amount first. Your insurer pays the rest up to your coverage limit.
Example: $1,000 deductible
| Claim Amount | You Pay | Insurer Pays |
|---|---|---|
| $500 | $500 (below deductible, so no claim) | $0 |
| $1,000 | $1,000 | $0 |
| $3,000 | $1,000 | $2,000 |
| $10,000 | $1,000 | $9,000 |
| $50,000 | $1,000 | $49,000 |
Key point: If your damage is less than your deductible, the insurer pays nothing, so a claim brings no payment.
Deductibles by insurance type
Car insurance deductibles
The coverages for damage to your own vehicle (collision, comprehensive, specified perils and all perils) are subject to the deductibles set out in your policy, and a higher deductible lowers the premium. Collision and comprehensive can carry different deductible amounts. In Saskatchewan and Manitoba, the public basic plan itself covers damage to your own vehicle and sets the deductible; in Saskatchewan, for example, SGI’s basic physical damage coverage carries a $700 deductible.
Home insurance deductibles
A home policy often has more than one deductible. The main deductible applies to most claims, while optional coverages such as sewer backup, overland flood and earthquake (none of which is part of a standard home policy) can carry their own deductibles set by the insurer. The declarations page lists each one.
Condo insurance deductibles
Condo (strata) insurance is provided by two separate policies, the condo corporation’s master policy and the owner’s own policy, and each has its own deductible. Depending on the province’s condo law and the corporation’s rules, an owner can be charged part of the corporation’s costs after a loss, and unit-owner policies offer “loss assessment” coverage that pays your share, up to a stated limit.
Other insurance deductibles
Pet insurance deductibles depend on the insurer: some apply once a year, while others apply once per condition (Trupanion’s deductible, for example, is paid once for each condition over the pet’s lifetime). Details are in our pet insurance guide. Travel insurance and disability insurance are covered in their own guides.
How your deductible affects your premiums
A higher deductible means the insurer pays less on each claim, so the premium goes down. How much it goes down depends on the insurer, the coverage and your risk profile, which is why the only reliable figure is a quote at each deductible level. The worked example below shows how to compare the two.
Choosing the right deductible
The decision framework
| Factor | Choose Lower Deductible | Choose Higher Deductible |
|---|---|---|
| Emergency fund | Small or none | Enough to pay the higher deductible |
| Claims frequency | You tend to file claims | You rarely file claims |
| Risk tolerance | Prefer predictability | Comfortable with occasional large costs |
| Cash flow | Tight monthly budget | Can absorb unexpected expenses |
| Vehicle value | New/expensive vehicle | Older vehicle with lower value |
Break-even analysis
The key question: how many years of premium savings does it take to offset the higher deductible?
Example (hypothetical figures): switching car insurance collision from a $500 to a $1,000 deductible, where the insurer quotes a saving of $140 a year
| Extra deductible risk | $500 more per claim |
| Annual premium saving | $140/year |
| Break-even | 3.6 years without a claim |
With these figures, going more than 3.6 years between collision claims makes the higher deductible cheaper overall. With your own quotes, divide the extra deductible by the yearly saving.
When NOT to increase your deductible
- You do not have an emergency fund to cover the deductible
- You live in an area with a higher risk of claims (hail, flooding, theft)
- You have a history of frequent claims
- The premium savings are minimal relative to the extra risk
Common deductible mistakes
- A deductible you can’t pay. If you couldn’t pay $2,000 out of pocket after an accident, a $2,000 deductible leaves you exposed.
- Small claims just above the deductible. A $1,200 claim on a $1,000 deductible nets only $200 but may raise premiums for years; how claims feed into renewal pricing is covered in why insurance premiums go up.
- Forgetting separate deductibles. A home policy can carry separate deductibles for optional coverages such as sewer backup or overland flood.
- Not reviewing after life changes. If your finances improve, a higher deductible can save money every year.
- Assuming the deductible is per year. Car and home insurance deductibles apply per claim, not per year (pet insurance is the exception, where some deductibles are annual and others per condition).
Deductible strategy: emergency fund alignment
A deductible is easiest to live with when your emergency fund can cover it. A deductible larger than the cash you could raise quickly leaves a gap at exactly the moment you need the insurance, while a deductible well below your savings may mean paying a higher premium for protection you could provide yourself.
Frequently asked questions
Should I file a claim for minor damage? Compare what the insurer would pay with what the claim could cost later. In a hypothetical case, if the repair costs $1,800 and your deductible is $500, you’d receive $1,300 from insurance. But if an at-fault claim raised your premium by $300 a year for 5 years, you would pay $1,500 in extra premiums, more than the $1,300 benefit. How much a claim raises your premium, and for how long, depends on the insurer and the claim, so ask before filing. The steps for filing, if you do claim, are in how to file an insurance claim.
Do deductibles apply to liability claims? Generally not. If a guest is injured in your home and sues you, your home insurance liability coverage normally responds without a deductible, up to its limit. Deductibles apply to coverage for your own property (collision and comprehensive for auto; dwelling and contents for home).
Related Reading
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- Government of Saskatchewan: SUMMARY OF 2026-27 CHANGES TO FEES AND CHARGES